INDIA Trends and Developments Contributed by: Arvind Sharma, Ajoy Roy, Sanjiv Malhotra, Shahana Chatterji and J.V. Abhay, Shardul Amarchand Mangaldas & Co.
Tax laws in India Taxes applicable to businesses
3. when data fiduciaries receive a request for erasure of the personal data of a data principal. The purpose under (1) is considered no longer served if the data principal (a) does not approach the data fiduciary for the specified purpose, or (b) does not exercise any of their rights related to the data processing for a prescribed period. The Draft Rules propose a “prescribed period” under (a) and (b) of three years for social media, gaming and e-commerce companies. Data Protection Board of India (DPBI) The DPBI is a quasi-judicial body that will be established under the DPDP Act. The primary role of the DPBI will be to oversee compliance with the DPDP Framework, address complaints related to personal data breaches and impose penalties for non-compliance. The DPBI is empowered to investigate data breaches, direct urgent remedial or mitigation measures, and adjudicate disputes between data principals and data fiduciaries. The DPBI is empowered to impose monetary penalties ranging from INR50 million (approximately USD6 million) to INR250 million (approximately USD29 million). Upcoming regulatory developments The Indian Parliament enacted the DPDP Act on 11 August 2023, but the Ministry of Electronics and Information Technology (“MeitY”) is yet to notify it. The DPDP Act is likely to be enforced in phases as MeitY has the power to notify dif - ferent provisions of the DPDP Act at different times. Public consultations on the Draft Rules concluded recently. Upon finalising the Draft Rules, MeitY is expected to notify the DPDP Framework.
Companies in India are taxed under the Income Tax Act, 1961, with rates depending on turnover, entity type, and chosen tax regime. Domestic companies face: • a 25% tax if turnover does not exceed INR4 billion in FY 2023–24 (otherwise, 30%); • a surcharge of 7% (if income over is INR10 million) or 12% (if over INR100 million); • a 4% health and education cess; • a concessional 22% rate available without certain exemptions (10% surcharge); and • a minimum alternate tax (MAT) of 15%, which applies unless the 22% regime is chosen. Domestic partnerships face: • a 30% tax plus surcharge (12% if income exceeds INR10 million) and a cess; and • a MAT applies. Foreign companies face: • a 35% tax rate plus a surcharge (2% on income over INR10 million, 5% over INR100 million) and a 4% cess from 1 April 2024; and • MAT does not apply if there is no Indian per - manent establishment under a tax treaty. Withholding tax is levied at 2–10% for residents, 20% for non-residents (5% in some cases), with treaty benefits available. Buyback tax was abolished from 1 October 2024 onwards; buyback proceeds are now taxed as dividends. Tax consolidation is not allowed; each entity is taxed separately.
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